According to the doc here :
Before you can unpublish an app, you must ensure that:
You have accepted the latest Developer Distribution Agreement. Your app has no errors that need to be addressed, such as failing to fill in the content rating questionnaire or provide details about your app's target audience and content. Managed publishing is not active for the app that you want to unpublish.
Thanks to @ PineapplePie's comment i was able to un-publish the app. App had managed publishing on. After turning off managed publishing i was able to un-publish the app.
Solution:
Turn off managed publishing in Publishing overview -> Managed publishing status
Note:
After un-publishing the app i again tried to enable managed publishing but it gave following error message
The same applies for un-publishing the app if you have managed publishing on
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